vodafone qatar p.q.s.c....market share in competitive environment** rms +1.1pts yoy growth despite...
TRANSCRIPT
29 July 2020
Vodafone Qatar P.Q.S.C.Financial results: Half year ended 30 June 2020
Disclaimer
2
• The following presentation is made only to, and is directed only at, persons to whom such a presentation may lawfully
be communicated (“relevant persons”). Any person who is not a relevant person should not act or rely on this
presentation or any of its contents.
• This presentation contains forward-looking statements that are subject to risks and uncertainties, including statements
about Vodafone Qatar’s beliefs and expectations.
• These forward-looking statements are based on assumptions that Vodafone Qatar has made in light of its experience in
the industry in which it operates, as well as its perceptions of historical trends, current conditions, expected future
developments and other factors which Vodafone Qatar believes are appropriate under the circumstances. Prospective
investors should understand that these statements are not guarantees of future performance or results.
• Due to these factors, Vodafone Qatar cautions that prospective investors should not place undue reliance on any
forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made.
New risks and uncertainties arise from time-to-time, and it is impossible to predict these events or how they may affect
Vodafone Qatar.
• Vodafone and the Vodafone logo are trademarks of the Vodafone Group.
Quarterly highlights
Hamad Al ThaniChief Executive Officer
4
Profitable
Growth
Continues
10 QuartersConsecutive YoY quarterly
total revenue growth
Net ProfitReaches QR 81m in FY20 H1
a YoY increase of 4%
and underlying* increase of 17%
Strong
Commercial
Rebound
Subscriber ReboundDespite initial shock, active
subscribers showing
strong momentum since
start of May
Stable ARPUARPU remained flat QoQ
while usage is showing healthy
signs of stabilization after peaks
observed during stay at home orders
Strengthening
Business
Resilience
Digital Adoption
AcceleratedDigital Channel (Care & Sales)
catering to evolving customer
behaviours and exceeding
expectations
Optimization of SpendRationalization of Spend
(OPEX / CAPEX) initiatives
underway
Capturing
Market Share in
Competitive
Environment**
RMS +1.1pts YoYGrowth despite decline
In overall market value
resulting in a total
RMS of 22.8% in Q1-2020
Executive Summary | Quarterly Highlights
(*) Note: Excluding one-off project margin in FY19 Q1
(**) Note: On a 12 months trailing basis
Meeting the Demands
of our CustomersDelivering critical national
digital infrastructure &
maintaining our strong
network performance
Financial review
Brett Goschen
Chief Financial Officer
FY 2020 H1 | Key points to note and highlights
6
Items impacting YoY
comparisons
Strong Financial
Performance
Growth
in net profit
• One-off project revenue recognized
in FY19 Q1 and related margin
amounting to QR 9m (‘one-off’)
• Regulatory license fees paid to CRA
increased from 1% to 1.5% of
adjusted service revenue impacting
QR 4.1m in FY20 H1
• FY20 H1 service revenue grows
3.4% YoY to reach QR 1 Billion
driven by continued growth in
postpaid and home broadband
solutions
• Reported EBITDA margin for H1 is
36.3% and EBITDA margin excluding
equipment is 38.6% (2.8 ppts
higher YoY)
• Net profit grows 4% YoY in FY20
H1 to QR 81m, the highest ever
7
967 1,000
95 72
FY20 H1FY19 H1
1,062 1,072+3.4%
+1%
Total revenue
398 366
307317
FY20 H1FY19 H1
704 683
-3.1%
Direct costs OPEX
78
81
-9
FY20 H1FY19 H1
69+3.9%
+17%
358
390
FY19 H1 FY20 H1
349
-9
+8.9%
+11.6%
Service revenue Equipment revenue Reported EBITDA One off
• Total revenue QR 10m higher, led by Service revenue growth 3.4% driven by growth in fixed broadband (GigaHome) and postpaid
• Expenses lower by 3.1% due to cost optimisation program offset by higher fixed, 5G operational costs, and license fee increase
• Underlying EBITDA higher by 11.6% mainly due to higher service revenue and lower expenses
• Underlying Net profit 17% or QR 12m higher following the EBITDA growth partially offset by higher depreciation and financing costs
1
2
3
4
Reported Net profit One off
Expenses EBITDA Net profit
Half year ended: Financial performance (Year on Year) (QR m)
FY20 H1 v FY19 H1
• Total revenue grew 1% driven by growth in postpaid, fixed broadband and equipment revenue offset by decline in prepaid and reduction in termination rates
• Expenses lower by 2.3% due to cost optimisation partially offset by higher fixed and 5G operational costs
• EBITDA higher by 7% or QR 13m mainly driven by cost optimisation (lower expenses)
• Net profit QR 2m lower due to EBITDA flow through offset by higher depreciation
Quarterly Financial Performance (Year on Year) (QR m)
FY20 Q2 v FY19 Q2
494 492
34 40
FY19 Q2 FY20 Q2
531527
+1%
Total revenue
195 180
155161
FY19 Q2 FY20 Q2
350 342
-2.3%
Expenses
Direct costs OPEX
3533
FY20 Q2FY19 Q2
-4.1%
EBITDA
8
Service revenue Equipment revenue
Net profit
1
2
3
4
177190
FY19 Q2 FY20 Q2
+7.0%
• Postpaid revenue increased by 3.8% primarily due to subscriber growth
• Prepaid revenue declined by 18.4% as a result of pre-to-post migrations, lower subscribers, reduction of mobile termination rates (MTR) and declining prepaid
market
• Total service revenue is largely flat YoY
9
Postpaid Revenue
FY19 Q2 FY19 Q3 FY19 Q4 FY20 Q1 FY20 Q2
253
259
274270
262
+3.8%
171
150155
149139
FY19 Q2 FY20 Q2FY20 Q1FY19 Q3 FY19 Q4
-18.4%
Prepaid Revenue Total Service Revenue
494476
505 508 492
FY19 Q2 FY20 Q1FY19 Q3 FY19 Q4 FY20 Q2
FLAT
Service Revenue (QR m)
FY20 Q2 v FY19 Q2
1
2
3
10
• Revenue mix is fairly stable YoY between consumer segment and Enterprise & others
• ARPU YoY decline by QR 2 primarily due to reduction in termination rates
8582
86 84 83
FY19 Q3FY19 Q2 FY20 Q1FY19 Q4 FY20 Q2
-2.5% -0.8%
ARPU (QR)
Total Revenue & ARPU
1
2
64.1%
35.9%
63.8%
36.2%
TOTAL REVENUE
Consumer Revenue
Enterprise, Equipment &
others revenue
FY19 H1
FY20 H1
• EBITDA margin of 37.9% excluding equipment business (growth of 2.1 ppts YoY)
• Reported Margin at 35.7% grows 2.1 ppts YoY
Underlying EBITDA marginFY20 Q2 v FY19 Q2
11
EBITDA margin % FY20 H1 Underlying EBITDA Margin growth YoY
1
2
3.7
FY19 H1
U/L EBITDA
Net service
revenue mix
License fee
increase
(0.4)(0.5)
Bad debt and
collection
charges
38.6%
FY20 H1
U/L EBITDA
35.8%
+2.8 ppts
12
Quarterly CAPEX MixTotal CAPEX
Capacity run and
maintenance
Coverage &
capacity
expansion
and others
Capabilities & IT
Transformation
CAPEX investment QR 103m focusing on:
• Mobility and fixed coverage expansion
• Investments to maintain the network
• Development of new commercial capabilities and products
CAPEX (QR m)
141
213
241
59
40
FY19 Q2
63
FY19 Q3 FY19 Q4 FY20 Q2FY20 Q1
103
-38m
CAPEX
Intensity26.8% 43.4% 42.2% 10.8% 7.5%
1
2
3
Reported CAPEX Asset Retirement Obligation (ARO)
13
83
8
Commentary YoY:
• Revenue increased QR 10m led by Service revenue growth
of 3.4% driven by growing fixed broadband and postpaid.
• Interconnect and other direct expenses QR 32m lower
driven by cost optimisation program and lower one-off
project costs, offset by increase in license fees
• Network, rentals and other operational expenses
increased by QR 13m majorly additional fixed and 5G
operational costs, partially offset by cost optimisation
• Depreciation and amortization QR 24m higher due to
higher CAPEX incurred in FY 2019
• Financing costs increase by QR 6m due to local
refinancing of group financing facility and higher net debt
13
Consolidated statement of income Half year ended 30 June 2020
QR m 30 Jun 20 30 Jun 19 YoY
Revenue 1,072 1,062 10
Interconnection and other direct expenses (366) (398) 32
Network, rentals and other operational expenses (205) (192) (13)
Employee salaries and benefits (112) (114) 2
Depreciation of property, plant and equipment (122) (111) (11)
Amortisation of intangible assets (91) (89) (2)
Depreciation of right-of-use assets (53) (42) (11)
Industry fee (9) (9) 0
Operating profit 115 106 9
Finance cost (22) (16) (6)
Other financing costs (13) (14) 1
Other income 1 2 (1)
Profit for the period 81 78 3
Basic and diluted earnings per share
(in QR per share)0.019 0.018 0.001
Six months ended
Assets
• Property, plant and equipment decreased by QR 51m driven by
depreciation QR 122m and adjustment of asset retirement
obligation QR 63m offset by CAPEX of QR 135m
• Intangible assets QR 64m lower due to amortization QR 91m
offset by CAPEX of QR 27m
• Right of use assets QR 5m lower as a result of depreciation QR
53m offset by capitalisation for new leases of QR 48m
• Trade and other receivables QR 72m lower mainly due to higher
collection from dealers and lower prepayments
• Cash and bank balances QR 168m lower following the dividend
payment and settlement of FY19 CAPEX liabilities
Equity
• Equity decreased by QR 132m due to dividend of QR 211m and
social and sports fund QR 2m for FY19 offset by the net profit for
the period
Liabilities
• Loan and borrowings increased QR 100m on account of
drawdown during the period
• Provisions, trade and other payables decreased QR 332m
primarily driven by settlement of FY19 CAPEX liabilities, revision of
asset retirement obligation estimates and reduction in other
payables14
Consolidated statement of financial positionAs at 30 June 2020QR m Jun-20 Dec-19 Var
Property, plant and equipment 1,433 1,484 (51)
Intangible assets 4,407 4,471 (64)
Right-of-use assets 353 358 (5)
Trade and other receivables 32 37 (5)
Total non-current assets 6,225 6,350 (125)
Inventories 32 38 (6)
Trade and other receivables 340 407 (67)
Cash and bank balances 135 303 (168)
Total current assets 506 748 (242)
Total assets 6,731 7,098 (367)
Share capital 4,227 4,227 -
Legal reserve 69 63 6
Retained earnings 91 230 (139)
Total equity 4,387 4,519 (132)
Loans and borrowings 818 820 (3)
Lease liabilities 272 253 19
Provisions and trade payables 150 229 (79)
Total non-current liabilities 1,239 1,302 (63)
Loans and borrowings 103 - 103
Lease liabilities 101 121 (20)
Trade and other payables 902 1,155 (253)
Total current liabilities 1,105 1,276 (171)
Total equity and liabilities 6,731 7,098 (367)
Questions ?
Thank You
The Future Is Exciting
For more information visit our website: www.vodafone.qa/en/investor-relations
Or email us: [email protected]
Appendix
18
Total Mobile Customers
1,763
FY20 Q2FY19 Q2 FY19 Q3 FY19 Q4 FY20 Q1
1,721 1,737 1,734
1,650
-6.4%
Mobile Customers (‘000s)FY20 Q2 v FY19 Q2